AMC CEO: Quality Programming Counters Falling Ratings on Cable TV

Speaking at an investor’s conference, Josh Sapan said the network wants to own more of the shows they air and plans to expand them into international markets

At a time when many cable networks are seeing diminishing audiences and fear that over-the-top providers may hurt their business even more, AMC Networks is poised to take advantage of the changes thanks to its high-quality programming. That was the message from AMC Networks president/CEO Josh Sapan, speaking at the UBS Global Media and Communications Conference on Tuesday.

“I think we’re in a potentially advantageous position,” said Sapan.

He explained that most of their channels — IFC, Sundance, WE TV and the most recent acquisition, BBC America — sell to cable operators and consumers at a lower price than many other channels that deliver less audience and don’t have as much quality programming. Sapan said in the next few years, as consumers demand more selective choices and packages of programming, the virtue of selling high quality at a lower price will play to this new proposition. “If it’s a value issue,” Sapan said, “it’s an advantage for us.”

That belief in offering value is what drove the acquisition of 49.9 percent of BBC America in October, explained Sapan. He said they felt it offered an association with the BBC, which he called “the finest producer of dramatic and comedy content” in the world; and a channel with superb content already in 80 million TV homes that is “truly not getting the recognition, audience and money, which its content should have.”

He said that the plan for BBC America, as well as for Sundance, IFC and WE TV, is to “significantly expand distribution,” and to grow the audience by offering “the most critically acclaimed, finest television on the dial or on demand or anywhere without exception.” Sapan explained that they believe there has been a “shift in what television looks like in the last several years [and] we had the benefit of being early to it with Mad Men. I think its interesting audiences have proven that they like good stuff. So the appetite for good stuff has increased dramatically.”

He said TV now occupies the place that used to belong to movies, where people look to see what is coming that will have everyone talking.

He said it began with the quality of programing on pay TV channels (HBO, Showtime, Starz) but now “a couple basic channels, we among them, have tried to find that same area.”

He said as a result viewers are seeking out the best shows. “We’re beneficiaries of the sort of cultural radar,” Sapan said, “asking where the next great television series are coming from.”

One way to feed that growing interest is to use SVOD services, including Netflix, not only to grow revenue from high-quality programing but also to showcase series to actually drive increased viewing of original episodes. He said they do that by having the shows from past seasons on VOD just before a new season starts, building interest and momentum toward the next season.

To feed this desire, Sapan said AMC has put its focus on not only creating high-quality programs but owning more of them, and having global rights to sell them worldwide.

“We have been on a mission to diversify revenue streams for our company by expanding our footprint for our channel,” he said, which has meant expanding distribution in Canada, Latin America and Europe. Part of that is being accomplished since the $1 billion acquisition of Chellomedia from Liberty Global in February, which gives them direct distribution in some 138 countries reaching 390 million homes. Since then they have rapidly rebranded many international channels, including MGM channels, that are now AMC channels worldwide. They have also expanded distribution of the IFC, Sundance and WE TV brands outside the U.S. as well.

That creates a need for more quality shows to feed the system. Sapan cited the Breaking Bad follow-up Better Call Saul, coming in February, as an example of a show that meets the criteria.

They are also developing a companion series to The Walking Dead that would explore how zombies are infecting other parts of the world. “I wasn’t a zombie lover when it began,” Sapan said, “but I am a zombie lover now.”

Other shows he's high on include Badlands, which he described as “Crouching Tiger, Hidden Dragon comes to television;” Humans, about robots that take on human characteristics; Preacher, based on the comic book, with Seth Rogen’s company involved; and the final two seasons of Hell on Wheels, the western they hope will have a big finish.

Sapan said about 20 percent of AMC Networks revenue now comes from international markets.

Each of the other networks, such as Sundance, have expanded distribution and are also growing the program lineup. He cited the series Rectify and the mini-series One Child as examples of what has helped them double distribution in recent years.

Sapan said there are no immediate plans to make additional acquisitions but they remain open to opportunities. He said AMC will continue to be “highly selective” and only consider acquisitions that are “completely suited to what we have said we are going to do.”